August 2, 2011 / 10:00 PM / 8 years ago

U.S. lawmaker challenges opposition to AT&T merger

WASHINGTON (Reuters) - The chairman of the U.S. House of Representatives Judiciary Committee, urged the federal government to resist one-sided calls to block AT&T Inc’s $39 billion plan to buy wireless rival T-Mobile USA.

In a letter sent Monday to the U.S. Justice Department and Federal Communications Commission, Representative Lamar Smith said calls to block the merger that ignore the deal’s benefits to wireless service paint an incomplete picture.

“I urge you to carefully weigh all of the evidence, including the many benefits of this transaction, before coming to a conclusion,” the Republican from Texas wrote.

The ultimate decision on the deal rests with the Justice Department, that is conducting an antitrust review, and the FCC, which is weighing whether the transaction is in the public interest.

Lawmakers have no direct role in reviewing the merger that was proposed in March, but Congress, through oversight of the regulators, and by holding hearings on such deals, can influence the climate of public opinion.

Smith, whose committee oversees the Justice Department, said AT&T’s acquisition of T-Mobile from Deutsche Telekom AG had the potential to create jobs, spur innovation, enhance AT&T’s broadband network and encourage competitors to also improve their networks.

He called lawmakers’ objections to the deal one-sided and based on limited information as congressional hearings are not equipped to provide the detailed analysis required for a merger of this size.

“There is at least as much evidence in the hearing record supporting the merger as opposing it,” he said in the letter.

While Smith did not expressly endorse the merger, analysts at Stifel Nicolaus said in a note to clients, “his letter is helpful to AT&T/T-Mobile in answering the opposition of Senator (Herb) Kohl, chairman of the Senate Judiciary Committee’s antitrust subcommittee, as well as the resistance of other senior Democrats.”

Kohl sent a letter to regulators in July, saying the merger “would likely cause substantial harm to competition and consumers, would be contrary to antitrust law and not in the public interest, and therefore should be blocked.”

The merger would concentrate 80 percent of the U.S. wireless market in just two companies: AT&T/T-Mobile and Verizon Wireless, a venture of Verizon Communications and Vodafone Group Plc.

AT&T argues that the purchase of T-Mobile will help it expand faster service to more customers.

Critics charge that less competition will increase prices and limit consumer choice.

Reporting by Jasmin Melvin; Editing by Tim Dobbyn

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